Stratasys Ltd. (Nasdaq: SSYS) announced its fourth quarter and full year 2023 financial results on , revealing a complex picture of growth and challenges in the polymer 3D printing market. While the company reported tenth consecutive quarter of adjusted profitability, overall revenue faced headwinds, prompting a continued strategic review.
Financial Performance: A Mixed Bag
Fourth quarter revenue reached $156.3 million, a 1.3% increase compared to the fourth quarter of 2022 when excluding the impact of divestitures. However, this represents a 1.9% decrease against actual fourth quarter 2022 revenues. Full year revenue totaled $627.6 million, showing a 1.3% increase when adjusted for divestitures, but a 3.7% decline compared to the full year 2022. These figures highlight the impact of strategic portfolio adjustments undertaken by Stratasys.
The company reported a fourth quarter GAAP net loss of $15.0 million, or $0.22 per diluted share, but a non-GAAP net income of $1.6 million, or $0.02 per diluted share. For the full year, the GAAP net loss was $123.1 million, or $1.79 per diluted share, while non-GAAP net income reached $7.7 million, or $0.11 per diluted share. The discrepancy between GAAP and non-GAAP results underscores the impact of certain adjustments, which the company did not detail in the provided materials.
Stratasys ended 2023 with $162.6 million in cash and equivalents and no debt, providing a solid financial foundation as it navigates its strategic alternatives process.
Consumables Drive Revenue, Strategic Review Continues
A key driver of the fourth quarter’s performance was record-level recurring revenue from consumables, indicating strong utilization of Stratasys’ installed printer base. This suggests customer loyalty and ongoing demand for 3D printing materials. Dr. Yoav Zeif, Stratasys’ Chief Executive Officer, emphasized this point, stating, “We also delivered 1.3% full year revenue growth when adjusted for divestitures despite a persistently challenging backdrop for our customers. Revenue in the fourth quarter was driven by another record for consumables sales, demonstrating how utilization of our systems remains strong, while a relentless focus on cost control contributed to improved margins.”
Despite these positive aspects, Stratasys’ board of directors is continuing a comprehensive strategic alternatives process, signaling a potential shift in the company’s direction. This process suggests the company is exploring options to enhance shareholder value, potentially including a sale, merger, or other strategic transaction.
The Proposed Merger with Desktop Metal
The financial results come amidst ongoing efforts to secure shareholder approval for a merger with Desktop Metal, Inc. (NYSE: DM). Stratasys has been actively urging shareholders to vote “FOR” all proposals related to the merger, which the company believes will create an “additive manufacturing powerhouse.”
According to a press release, the combination with Desktop Metal is intended to leverage Stratasys’ strong global infrastructure in polymer 3D printing with Desktop Metal’s expertise in metal 3D printing. The company argues that the merger will result in a complementary portfolio, innovative technology pipeline, and a strategic customer base. Stratasys highlighted that Desktop Metal provides broad products and services with minimal overlap, creating a fully complementary AM portfolio.
The Stratasys Extraordinary General Meeting of Shareholders (the “Stratasys EGM”) to vote on the merger was scheduled for . Shareholders of record as of were eligible to vote.
2024 Outlook
The company provided a 2024 outlook, but specific details were not included in the provided materials. This lack of detail suggests uncertainty surrounding the company’s future performance, potentially linked to the ongoing strategic review and the outcome of the proposed merger with Desktop Metal.
Dr. Zeif stated, “We are innovating and investing as we expand our leadership in additive manufacturing,” indicating a continued commitment to research and development despite the challenging market conditions. However, the success of these efforts will likely depend on the resolution of the strategic alternatives process and the company’s ability to navigate the evolving 3D printing landscape.
The situation highlights the competitive dynamics within the additive manufacturing industry, where companies are striving to differentiate themselves through technology innovation, strategic partnerships, and market expansion. Stratasys’ performance in 2023 and its future prospects will be closely watched by investors and industry observers alike.
